FIU-Nepal flags rise in crypto-based money laundering and fraud
Nepal’s Financial Intelligence Unit (FIU) has highlighted an increase in the misuse of crypto assets in the country. The agency, which keeps a close eye on the cryptosphere, has said that laundering of illegal financing through cryptocurrencies has spiked in the country. Nepal Rastra Bank has released its ‘Strategic Analysis Report’, which claims that notorious actors have converted their ill-gotten funds into cryptocurrencies as these assets enable private transactions. Nepal is working on a roadmap to combat these existing issues related to crypto exploitation.
Cryptocurrencies such as Bitcoin and Ether bring an element of anonymity to financial transactions that are also facilitated in real time, making them difficult to trace. This makes it challenging for law enforcement agencies to track transaction trails that could lead to the identification of initiators.
In his reportThe FIU-Nepal (Nepal Rastra Bank) noted that “conversion of fraud proceeds into cryptocurrency or also for online betting is often observed. The aim is to increase the time it takes for FIUs and LEAs to access and analyze the necessary financial data across all sectors, and eliminate institutions that make it difficult to trace the funds, freeze returns and return to claim.”
Nepal is also witnessing an increase in fraud cases where potential investors are lured into finally risky crypto schemes.
“The advertisements direct the potential prey to deposit an amount of money into certain bank accounts or wallet accounts. The amount so deposited is not refunded later as promised. In countries like Nepal, where investments in virtual assets such as cryptocurrency are illegal, victims rarely come forward with complaints against such scams due to possible consequences,” the report said, explaining the issue of concerns.
FIU-Nepal is currently conducting an analysis of the types of actions other countries have taken to tackle cyber fraud. The country plans to launch educational campaigns to raise awareness around the financial risks associated with volatile crypto assets.
In addition, Nepal is exploring the development of a technologically advanced platform capable of tracking information from various financial institutions to intercept illicit proceeds.
In 2023, Nepal instructed all internet service providers (ISPs) in the country to block access to crypto trading platforms. At the time, there were growing concerns about the misuse of crypto assets to move illicit funds. In Nepal, it is prohibited to use cryptocurrencies as a monetary instrument.
